What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-12 compared with 2026-05-11 · 105 added, 64 removed, 111 unchanged (60% of the section changed)

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fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis

of Financial Condition and Results of Operations” regarding the completion of a proposed business combination, our financial position,

of Financial Condition and Results of Operations” regarding the completion of an initial business combination, our financial position,

business strategy and the plans and objectives of management for future operations, are forward-looking statements.

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could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking

statements, including that the conditions of a business combination are not satisfied.

For information identifying important factors

that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the “Risk

Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange

Commission (“SEC”).

Our securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov.

Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking

statements whether as a result of new information, future events or otherwise.

statements, including our ability to identify a suitable target business and complete an initial business combination within the required

For information identifying important factors that could cause actual results to differ materially from those anticipated

in the forward-looking statements, please refer to the “Risk Factors” section of our Annual Report on Form 10-K for the year

ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”).

Our securities filings can be accessed

on the EDGAR section of the SEC’s website at www.sec.gov.

Except as expressly required by applicable securities law, we disclaim

any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events

or otherwise.

We are a blank check company incorporated on

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a private placement that closed simultaneously with the closing of the IPO, our shares, debt or a combination of cash, shares and debt.

We expect to continue to incur significant costs

in the pursuit of our acquisition plans.

We cannot assure you that our plans to complete a business combination will be successful.

Business Combination Agreement

Although we are not limited to a particular industry

or geographic region for purposes of completing an initial business combination, we are focusing our search on a target in an industry

where we believe our management’s expertise will provide us with a competitive advantage.

We are an early stage and emerging growth

company and, as such, we are subject to all of the risks associated with early stage and emerging growth companies.

We expect to continue

to incur significant costs in the pursuit of our acquisition plans.

We cannot assure you that our plans to complete a business combination

will be successful.

Termination of the PAD Business Combination

On November 26, 2025, we entered into a business

Combination Agreement (the “Business Combination Agreement”) with Sponsor HoldCo, Patriot Merger Subsidiary, Inc., a Florida

corporation and our direct, wholly-owned subsidiary (“Merger Sub”) and Precision Aerospace & Defense Group, Inc., a Florida

corporation (“PAD”).

The Business Combination Agreement provides, among other things, that on the terms and subject to the

conditions set forth therein:

(i) we will domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General

Corporation Law and Part XII of the Companies Act (As Revised) of the Cayman Islands (the “Domestication”);

and (ii) following

the Domestication, Merger Sub will merge with and into PAD with PAD surviving the merger as our wholly-owned subsidiary (the “Merger”),

in accordance with the Business Combination Agreement and the Florida Business Corporation Act.

combination agreement, as amended by Amendment No.

1 thereto, dated May 17, 2026 (the “PAD Business Combination Agreement”)

with Sponsor HoldCo, Patriot Merger Subsidiary, Inc., a Florida corporation and our direct, wholly-owned subsidiary (“Merger Sub”)

and Precision Aerospace & Defense Group, Inc., a Florida corporation (“PAD”).

The PAD Business Combination Agreement

provided, among other things, that on the terms and subject to the conditions set forth therein:

(i) we would domesticate as a Delaware

corporation in accordance with Section 388 of the Delaware General Corporation Law and Part XII of the Companies Act (As Revised) of

the Cayman Islands (the “Domestication”);

and (ii) following the Domestication, Merger Sub would merge with and into PAD

with PAD surviving the merger as our wholly-owned subsidiary (the “Merger”), in accordance with the PAD Business Combination

Agreement and the Florida Business Corporation Act.

On July 16, 2026, the PAD Business Combination

Agreement was terminated in accordance with its terms (the “Termination”).

No termination fee was payable by either party.

As a result of the Termination, the voting and support agreement, dated November 26, 2025, by and among Sponsor HoldCo, the Company and

PAD (the “Sponsor Support Agreement”), terminated in accordance with its terms, and the voting and support agreements, dated

January 6, 2026 and January 19, 2026, by and among PAD, the Company and certain stockholders of PAD (the “PAD Stockholder Support

Agreements,” and together with the Sponsor Support Agreement, the “PAD Support Agreements”).

Following the Termination,

we intend to continue to identify and evaluate opportunities to consummate an initial business combination.

We must complete an initial

Business Combination by November 27, 2026, unless the period within which we must complete an initial business combination is extended

pursuant to our Amended and Restated Memorandum and Articles of Association (the “Extension Period”).

Results of Operations

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generated any revenues to date.

Our only activities from June 19, 2024 (inception) through March 31, 2026 were organizational activities,

those necessary to prepare for our IPO, described below, and subsequent to the IPO, identifying a target company for our initial business

combination and negotiating and attempting to complete the proposed PAD Business Combination.

Our only activities from June 19, 2024 (inception) through June 30, 2026 were organizational activities,

activities necessary to prepare for and consummate our IPO, and subsequent to the IPO, identifying a target company for our initial business

combination and negotiating and attempting to complete the proposed PAD Business Combination, which terminated on July 16, 2026.

to continue to identify and evaluate opportunities to consummate an initial business combination.

We do not expect to generate any operating

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Subsequent to our IPO, we have generated non-operating income

in the form of interest income on cash held in the trust account established in connection with our IPO (the “Trust Account”).

in the form of interest income on cash held in a trust account established in connection with our IPO (the “Trust Account”).

We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well

as for due diligence expenses.

For the three months ended March 31, 2026, we

had net income of $1,034,133, which consists of interest income on cash held in the Trust Account of $1,548,784, and interest earned

on bank account of $2,965, offset by general and administrative expenses of $517,616.

For the three months ended March 31, 2025, we

had net income of $1,447,897, which consists of interest income on cash held in the Trust Account of $1,785,684 and change on overallotment

liability of $26,558, offset by operating costs of $364,345.

as for due diligence expenses in connection with seeking a target for, and completing, our initial business combination.

For the three months ended June 30, 2026, we

had net income of $859,927, which consists of interest income on cash held in the Trust Account of $1,559,305, and interest earned on

bank account of $887, offset by general and administrative expenses of $700,265.

For the six months ended June 30, 2026, we had

net income of $1,894,060, which consists of interest income on cash held in the Trust Account of $3,108,089, and interest earned on bank

account of $3,852, offset by general and administrative expenses of $1,217,881.

For the three months ended June 30, 2025, we

had net income of $1,631,524, which consists of interest income on cash held in the Trust Account of $1,819,161 and interest earned on

bank account of $11,921, offset by general and administrative expenses of $199,558.

For the six months ended June 30, 2025, we had

net income of $3,079,421, which consists of interest income on cash held in the Trust Account of $3,604,845, change on overallotment

liability of $26,558 and interest earned on bank account of $11,921, offset by general and administrative expenses of $563,903.

Liquidity and Capital Resources

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units and (ii) 162,500 private placement units and 325,000 restricted Class A ordinary shares ($4,225,000 in the aggregate) with Sponsor

HoldCo, (C) 178,500 private placement units ($1,785,000 in the aggregate) with CCM and (D) 44,625 private placement units with Seaport

($446,250 in the aggregate).

HoldCo, (C) 178,500 private placement units ($1,785,000 in the aggregate) with CCM and (D) 44,625 private placement units ($446,250 in

the aggregate) with Seaport.

Following the closing of our IPO and the concurrent

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securities, or to any of our affiliates.

For the three months ended March 31, 2026, cash

For the six months ended June 30, 2026, cash

used in operating activities was $374,314.

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of $3,108,089 and net change in operating assets and liabilities of $839,715.

For the three months ended March 31, 2025, cash

For the six months ended June 30, 2025, cash

used in operating activities was $359,456.

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of $3,604,845, change in fair value of overallotment liability of $26,558, and net change in operating assets and liabilities of $192,526.

As of March 31, 2026, we had cash held in the

As of June 30, 2026, we had cash held in the

Trust Account of $186,893,545.

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capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

As of March 31, 2026, we had cash and cash

equivalents of $412,909 in our operating bank account.

We intend to use the funds held outside the Trust Account primarily to

complete our initial business combination pursuant to the Business Combination Agreement, or in the event that we are unable to

complete such business combination, to identify and evaluate target businesses, perform business due diligence on prospective target

businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or

owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete

an initial business combination.

As of June 30, 2026, we had cash and cash equivalents

of $170,477 in our operating bank account.

We intend to use the funds held outside the Trust Account primarily to identify and evaluate

target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar

locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of

prospective target businesses, and structure, negotiate and complete an initial business combination.

In order to fund working capital deficiencies

or finance transaction costs in connection with an initial business combination, either of Sponsor HoldCo, the Sponsor, any of their

respective affiliates or certain of our directors and officers may, but are not obligated to, loan us funds as may be required.

complete an initial business combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us.

the event that an initial business combination does not close, we may use a portion of the working capital held outside the Trust Account

to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment.

Up to $2,000,000 of any such working

capital loans for each such person may be convertible into a price of $10.00 per Class A ordinary share or unit, as applicable, at the

option of such lender.

Such Class A ordinary shares would be identical to the shares underlying the private placement units, and such

units would be identical to the private placement units.

Nonetheless, the mandatory liquidation date,

should our initial business combination not occur by November 27, 2026, and the potential subsequent dissolution raise substantial doubt

about our ability to continue as a going concern.

respective affiliates or certain of our directors and officers may, but are not obligated to, loan us funds as may be required (“Working

Capital Loans”).

If we complete an initial business combination, we may repay such loaned amounts out of the proceeds of the Trust

Account released to us.

In the event that an initial business combination does not close, we may use a portion of the working capital

held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment.

Upon consummation of a business combination, the Working Capital Loans would either be repaid, without interest, or, at the option of

the applicable lender, up to $2,000,000 of any such Working Capital Loans may be convertible into Class A ordinary shares or units at

a price of $10.00 per Class A ordinary share or unit, as applicable.

Such Class A ordinary shares would be identical to the shares underlying

the private placement units, and such units would be identical to the private placement units.

Except for the foregoing, the terms of

such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.

As of June 30,

2026 and December 31, 2025, there were no Working Capital Loans outstanding.

We have incurred and expect to continue to incur

significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation

of a business combination.

In connection with our assessment of going concern considerations in accordance with Financial Accounting

Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s

Ability to Continue as a Going Concern,” management has determined that our current conditions, including the termination of the

PAD Business Combination Agreement and the limited period remaining to identify and complete an alternative initial business combination,

raise substantial doubt about our ability to continue as a going concern within one year after the date that our financial statements

In addition, management has determined that if we are unable to complete an initial business combination within the Extension

Period, then we will cease all operations except for the purpose of liquidating.

While we would intend to complete a business combination

before the end of the Extension Period, there can be no assurance that any plans to raise capital or to consummate an initial business

combination will be successful.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities

which would be considered off-balance sheet arrangements as of March 31, 2026.

that would be considered off-balance sheet arrangements as of June 30, 2026.

We do not participate in transactions that create relationships

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The over-allotment option

expired unexercised on January 10, 2025 and Sponsor HoldCo forfeited 875,000 founder shares upon expiration of the over-allotment option

on January 10, 2025.

expired unexercised on January 10, 2025 and Sponsor HoldCo forfeited 875,000 founder shares upon such expiration.

The underwriters were entitled to a cash underwriting

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assets and liabilities at the date of the unaudited condensed consolidated financial statements, and income and expenses during the periods

Making estimates requires management to exercise significant judgement.

Making estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate

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Accordingly, the actual results could materially differ from those estimates.

As of March 31, 2026, we did not have any critical

As of June 30, 2026, we did not have any critical

accounting estimates to be disclosed.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis